Clientelism In Ethiopian Grain Markets: Opportunity Or Threat?

Course ID
Ethiopian Economics Association (EEA)
Getaw Tadesse

Agricultural Commodity Markets In Developing Countries Are Characterized By Informal Transactions In Which Social Networks And Personal Acquaintances Are Widely Recognized Means Of Exchange. Clientelism Is One Form Of Informal Transaction In Which A Buyer And A Seller Interact Repeatedly Over An Extended Period Of Time. This Paper Explores The Theoretical And Empirical Drivers Of Clientelism, As Well As Potential Problems That May Arise As A Result Of Its Widespread Use. We Develop A Structural Game Of Repeated Transactions To Represent Buyer-Seller Relations In An Ethiopian Grain Market. The Model Generates Hypotheses Regarding The Logic Of Participating In Tied Transactions, As Governed By Information Access And Screening Cost. We Show That When Repeated Transactions Create Trust Among Incumbents It Restricts Market Entry. The Model’s Predictions Are Tested Using Transaction Data Collected In Ethiopia In 2009. Results Support The View That Clientelism Is Driven By Access To Information And The Costs Of Screening. Engaging In Clientelism Lifts The Prices Received By Sellers But Requires Considerable Investment In Establishing Trust, Which In Turn Deters Market Entry

Corporate Author:Getnet Alemu & Worku Gebeyehu (Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher:Ethiopian Economic Association (EEA)
Primary Descriptors:Information, Market Power

Secondary Descriptor:Clientelism

Geographic Descriptors:Ethiopia
Cataloge Date:02/27/2013
Broad Subject heading:Informal Markets
Call Number:330.963 PRO 2012
Serial Key Title:Proceedings of the Ninth International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Publication date:2013-06-27 23:12:00
Forum or Discussion date:2013-02-27 15:57:54
Place of publication: Addis Ababa, Ethiopia
Type of material:Book
Current frequency: Annualy
Author: Getaw Tadesse and Gerald Shively